ECB Shows Concerns Over Protectionism and EM Volatility

ECB policymakers consider that risks to the Euro Area growth outlook were broadly balanced and the economy shows a considerable degree of domestic resilience. However, risks related to rising protectionism, vulnerabilities in emerging markets and financial market volatility gained more prominence recently, minutes from the ECB's September meeting showed.

Excerpts from the Account of the monetary policy meeting of the Governing Council of the European Central Bank, held in Frankfurt am Main on Wednesday and Thursday, 12-13 September 2018:

Risks to the growth outlook could still be assessed as broadly balanced. At the same time, risks relating to the threat of protectionism, vulnerabilities in emerging markets and financial market volatility had gained more prominence recently.

Members also exchanged views about the implications of recent developments in emerging market economies. It was noted that the depreciation of these economies’ currencies had so far been relatively contained and was primarily focused on countries that had weak fundamentals, relatively high foreign debt levels and, in particular, exposure to the US dollar. More generally, the point was made that growth in emerging market economies had made a sizeable positive contribution to global activity in the past decade, and that a natural adjustment was taking place. At the same time, there were indications that the euro area was moving away from reliance on external demand towards more domestic sources of expenditure, which should increase its resilience.

On the whole, the euro area economy was seen to have shown a considerable degree of domestic resilience so far and to have become more robust in recent years, in the context of higher capacity utilisation rates and partly as a result of significant reforms undertaken by many euro area countries since the financial crisis. However, at the same time, caution was seen as warranted since heightened uncertainty in the global environment might yet impact the euro area more significantly over time.

Against this background, risks to the euro area growth outlook were generally assessed to have remained broadly balanced overall, with risks relating to rising protectionism, vulnerabilities in emerging markets and financial market volatility having gained more prominence recently. While it was remarked that a case could also be made for characterising the risks to activity as now being tilted to the downside given the clear prevalence of downward global risks, it was agreed that the assessment that risks were broadly balanced should be maintained, also as the underlying strength of the economy was judged to be mitigating downside risks to activity.

In the light of the confirmation of the medium-term inflation outlook, members agreed that the June 2018 monetary policy decisions remained appropriate and called for a reaffirmation of the prevailing policy posture. Accordingly, all members supported the proposal made by Mr Praet in his introduction that, in line with the anticipation expressed at the Governing Council’s June monetary policy meeting, the monthly pace of net asset purchases would be reduced to €15 billion from October to December 2018. It was also seen as prudent to reiterate the Governing Council’s anticipation that – subject to incoming data confirming the medium-term inflation outlook – net purchases would then end. This was seen to be consistent with the Governing Council’s data-driven approach to monetary policy and fully in line with the decisions taken at the Governing Council’s June monetary policy meeting. It was underlined that uncertainties emanating from rising protectionism, vulnerabilities in emerging markets and financial market volatility had become more prominent recently, which continued to call for prudence in the formulation of the monetary policy stance.

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ECB Considered Bigger Rate Cut in December
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The inflation in the Euro Area will return to 2 percent without undue delay because there can't be any limit to how far the central bank deploys its tools to achieve it, President Draghi said in a speech at the Economic Club of New York on December 4th, suggesting policymakers could set more stimulus packages in next meetings.Published on 2015-12-04

ECB Unveils New Easing Measures
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ECB Says Inflation Risks Increased, Considers Further Stimulus
Current monetary policy measures would need to be re-examined in December as negative risks to inflation have increased and some external forces are offsetting the central bank stimulus, minutes from the last ECB monetary policy meeting showed.Published on 2015-11-19

ECB Ready to Act on Price Stability
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ECB Considers More Stimulus
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ECB Lowers Growth Forecasts, Shows Concerns over China
ECB policymakers expect the Euro Area economy to recover at a slower pace, hurt by a slowdown in China and emerging markets although they were not sure yet about the severity of the impact, minutes from last monetary policy meeting showed. GDP growth projections for the Euro Area were lowered to 1.4 percent in 2015, 1.7 percent in 2016 and 1.8 percent in 2017.
Published on 2015-10-08

ECB Leaves Rates Unchanged
The ECB left its benchmark refinancing rate steady at a record low of 0.05% on September 3rd as widely expected. The central bank also revised down growth and inflation forecasts.Published on 2015-09-03

ECB Leaves Rates on Hold, Raises ELA For Greece
The ECB left its benchmark refinancing rate unchanged at a record low 0.05% and the asset purchase program on hold on July 16th as widely expected. The ECB also decided to raise the emergency liquidity assistance to Greek banks by €900 million over 1 week.
Published on 2015-07-16

ECB Leaves Rates on Hold
The European Central Bank left its benchmark refinancing rate unchanged at a record low 0.05 percent on June 3rd as widely expected and confirmed its projections for the economic growth at 1.5 percent in 2015 and 1.9 percent in 2016.Published on 2015-06-03

ECB Urges for Structural Reforms
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ECB Says QE Working
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ECB Pledges to Increase Bond Buying in May and June
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Published on 2015-05-19

ECB Leaves Rates on Hold
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ECB to Start QE on March 9th
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Published on 2015-03-05

ECB QE Program Supported by Large Majority
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Published on 2015-02-19

ECB Will Buy 60 Billion Euros of Assets a Month
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Published on 2015-01-22

ECB Quantitative Easing Can’t Save the Eurozone
The ECB is likely to launch purchases of sovereign bonds later this week. The action may kick-start demand and fight deflation in the short term but its impact on growth and inflation is likely to be limited, according to a paper published by the Open Europe.Published on 2015-01-19

ECB Keeps Rates on Hold
The European Central Bank kept interest rates unchanged at record lows and said that monetary stimulus, the expansion of the balance sheet and the outlook for price developments will be only reassess early next year. The bank has also sharply lowered its economic growth forecasts, and stressed that the risks remain on the "downside".
Published on 2014-12-04

ECB Considers Buying Sovereign Bonds
The European Central Bank pledged it is ready to buy government bonds if inflation in the Euro Area fails to rise as anticipated, president Mario Draghi said in a speech during the European Parliament’s Economic and Monetary Affairs Committee meeting.
Published on 2014-11-17

ECB Leaves Rates Unchanged
The European Central Bank left its benchmark interest rate unchanged at a record low 0.05 percent on November 6th. Policymakers also said further stimulus measures were being prepared for use if needed.Published on 2014-11-06

25 Banks Fail ECB Stress Test
On October 26th, 2014 the European Central Bank published the results of a year-long examination of the resilience of the 130 largest banks in the euro area as of 31 December 2013. The so-called stress tests found a capital shortfall of € 25 billion at 25 banks.Published on 2014-10-27

ECB Leaves Rates on Hold, Shifts to Asset Buying
The European Central Bank left its benchmark interest rate on hold at 0.05 percent at its October 2nd meeting, following a 10 bps cut last month. Policymakers also decided to unveil the specifics of a plan to buy asset-backed securities and covered bonds.Published on 2014-10-02

ECB Cuts Rates to Record Low
At its September 4th meeting, the European Central Bank lowered the main refinancing rate by 10 bps to 0.05 percent and cut the deposit facility rate to -0.2 percent from -0.1 percent. The ECB also announced it would start buying securitized debt and covered bonds to ease the flow of bank funding to the economy.Published on 2014-09-04

ECB President Urges for Structural Reforms
In a speech during the Economic Symposium in Jackson Hole, ECB President Mario Draghi showed concerns over high unemployment in the Euro Area and said that the strategy to reduce it has to involve both the euro area and governments. Published on 2014-08-22

ECB Keeps Rates at Record Low
The European Central Bank held its benchmark interest rate at the record low of 0.15 percent for the second month in a row in spite of the weakness of the recovery in the Euro Zone and the threat of a deflation.Published on 2014-08-07

ECB Leaves Rates on Hold
At its July 3rd meeting, the European Central Bank left its key refinancing rate on hold at 0.15 percent, following last month’s cut, despite persistently low inflation. Published on 2014-07-03

ECB Cuts Rates to Record Low
At its June 5th meeting, the European Central Bank cut the main refinancing rate by 10 bps to 0.15 percent and the deposit rate to -0.1 percent, becoming the first major central bank to use negative interest rates.Published on 2014-06-05

ECB Leaves Rates on Hold, Hints Monetary Loosening in June
At its May 8th meeting, the European Central Bank left its main interest rate unchanged at 0.25 percent for the sixth month in a row. However, during the press conference, ECB President Draghi said the bank may loosen monetary policy next month to combat persistently low inflation in the eurozone.Published on 2014-05-08

ECB Holds Rates Steady
At its April 3rd meeting, the ECB left the benchmark interest rate unchanged at a record low 0.25 percent, as widely expected, despite deflation fears. The interest rate on the marginal lending facility and the deposit facility were also left unchanged at 0.75 percent and 0.00 percent, respectively.Published on 2014-04-03

ECB Keeps Monetary Policy on Hold
At its March 6th meeting, the ECB left main rates unchanged for the fourth month in a row in spite of inflation running at less than half its target of 2 percent.Published on 2014-03-06

ECB Leaves Rates on Hold
The Governing Council of the ECB decided on February 6th to keep rates on hold for the third straight meeting, despite a fresh fall in inflation in January. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility were left on hold at 0.25%, 0.75% and 0.00% respectively.Published on 2014-02-06

ECB Leaves Rates on Hold in December
The Governing Council of the ECB decided on December 5th that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.25 percent, 0.75 percent and 0.00 percent respectively.Published on 2013-12-05

ECB Lowers Benchmark Interest Rate to 0.25%
In its November 7th meeting, The European Central Bank cut its benchmark interest rate to a record low in response to falling inflation across the Euro Area countries.
Published on 2013-11-07

ECB Keeps Rates On Hold in October
At its October 2nd meeting, the Governing Council of the ECB decided to hold the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.50 percent, 1.00 percent and 0.00 percent respectively.Published on 2013-10-02

ECB Maintains Policy Unchanged in September
At its September 5th meeting, the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.50 percent, 1.00 percent and 0.00 percent respectively.Published on 2013-09-05

ECB Keeps Rates On Hold in August
In its August 1st meeting, the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.50 percent, 1.00 percent and 0.00 percent respectively.Published on 2013-08-01

ECB Keeps Rates Unchanged in July
In its July meeting, the ECB decided to keep its main interest rate unchanged at a record low 0.5% for the second straight month, after a 25 basis points cut in May. Political tensions arising in Portugal and Greece have pushed bond yields up across the region and pressure President Draghi to stick to loose monetary policy.Published on 2013-07-04

ECB Keeps Interest Rates Unchanged
The European Central Bank left its main interest rate unchanged at a record low 0.50 percent on June 6th, waiting for signs of economic recovery in the second half of the year.
Published on 2013-06-06